In nearly two thirds of cases the ombudsman found in favour of the consumer

The number of complaints regarding payday loans has more than doubled since 2012, as the Financial Ombudsman warns people to confront “the shame factor” and speak up about debt worries.

Almost 800 people made complaints about payday lending in the 2012/13 financial year, a report released today shows.

The numbers compare with fewer than 300 in the previous year.

In almost two thirds of cases taken on by the ombudsman, the office found in favour of the consumer.

A report by Welsh think tank the Bevan Foundation last month found 16% of the population, 400,000 people in Wales, are over-indebted.

The group found concentrations in the South Wales Valleys, the North Wales coast and some rural areas.

While in Britain around 3% have used home-collected, payday or pawnbroker loans in the last year, in Wales it’s 4%.

Debt charity StepChange noted a “dramatic increase” in clients with payday loans in Wales - from 2.6% in 2010 to 18.3% in 2013.

Rhondda MP Chris Bryant, who has campaigned against the tactics employed by payday lenders for around a decade, said the firms have been given countless opportunities to “get their act together”.

Labour MP Mr Bryant said: “They particularly target poor areas where a lot of people own their own homes because they know in the end they can always get their money back by taking their homes off them.

“In particular in the South Wales valleys where there are lots of miners’ cottages something like 70% of people own their own homes so it’s a very different pattern from the situation in inner cities.”

The ombudsman expressed concerns too many people struggling to repay loans felt powerless to complain.

Principal ombudsman Caroline Wayman said: “We often hear from people who took out a payday loan as a desperate last resort and blame themselves when the debt starts to spiral out of control.

“It’s important people don’t feel trapped with nowhere to turn because of the stigma associated with short-term lending.

Mike O’Connor, chief executive of StepChange, said the fact most complaints are upheld is further evidence that in many cases payday lenders fail to act in consumers’ best interests.

He said: “We urge anyone struggling with any form of debt to get free and impartial debt advice at the earliest opportunity.”

A spokesperson for the Consumer Finance Association (CFA), which represents payday lenders, said the complaints represent a “drop in the ocean” in terms of the ombudsman’s overall workload.

By contrast complaints about credit card firms number 10,500 and overall the ombudsman deals with around half a million complaints.

Russell Hamblin-Boone, chief executive of the CFA, said: “The fact is that short-term loans are popular with customers and reputable lenders lead the way in delivering good customer service by resolving any problems without the need to involve the ombudsman.”

Last month saw the introduction of a ban on rolling over loans more than twice and restrictions on draining borrowers’ accounts.

Firms also have to use “risk warnings” on ads and flag up help offered by the Money Advice Service.

Also city regulator the Financial Conduct Authority (FCA) is to consult on capping loan costs.